Wednesday, 17 April 2013

CLIMATE CHANGE: ''Carbon Emissions'': A setback from Europe Policy

The European Parliament on Tuesday voted down a proposal to make it more expensive for companies to burn fossil fuels, in what environmental advocates are calling a major setback in the fight against climate change.

The decision means the end of a European approach to climate policy. The paradox is that all the politicians who are constantly calling for more harmonization of climate policy in the EU and internationally are sending the policy back to the national level. That is an enormous step backwards -- also for global climate policy. Even China is now starting to pursue emissions trade. South Korea and Australia have already implemented it, and California has started a very ambitious system.

There were largely two kinds of opponents. For the larger contingent, the opposition on the right, this wasn't at all about emissions trading. They want to break the climate change policy itself. And they might even manage to do that on the EU level.

And the opposition from the left, argues that it's not good for the markets to regulate it. They want environmental protection by other means. But they recognize that we need efforts that are feasible on a global scale. CO2 taxes and renewable energy laws are interesting tools, but in the end they are not feasible across the globe. Emissions trading, despite all its problems, is the measure with the greatest perspective. And now it's being broken.

The European Commission, the EU's executive branch, had proposed measures that would have increased the price per ton of emitted carbon dioxide that companies must pay under the bloc's Emissions Trading System (ETS), which was set up in 2005. EU lawmakers narrowly rejected the bill 334 to 315, with 63 abstentions.

The ETS was initially lauded by environmental advocates as the world's most ambitious effort to combat climate change. The number of certificates granting permission to emit carbon dioxide is capped, and companies can trade those certificates on the open market, in theory giving an economic incentive to invest in cleaner energy.

However the economy slump in Europe has caused the price of the emission certificates to drop dramatically, currently hovering around €5 ($6.50) per ton of carbon dioxide. The European Commission's plan would have delayed the auctioning of 900 million additional pollution certificates. While the European Parliament voted down the bill, it sent it back to committee for revision, leaving the door open for future reform.

Europe's once celebrated cap-and-trade system to limit carbon emissions has languished. The economic crisis has caused the price of emissions licenses to plummet, and a recent remedy to the problem has been rejected by EU lawmakers.